1. BMW Films ----Group 16 Songyan He Emily Walker Amanda Jones
Mengjia Wang
Elena Ratnikova

2. Company History Founded in 1916 as an aircraft engine manufacturer
Produced first automobile in 1929
Luxury/performance segment by 1980’s with three Series: 3, 5, 7

3. BMW in the US Mid 1970’s: niche foreign car manufacturer
Late 1970’s: very popular luxury brand
Late 1980’s: luxury car market shift
BMW as the outdated brand
Competition: Acura (1986), Lexus & Nissan (1989)
1992 BMW sales fall & very low customer satisfaction

4. Invigoration & Recovery in the US
1. Introduced new models within core Series
2. Aggressive pricing strategy
3. Reorganization of the dealer network
4. Introduction of several new Series
Modifications for North America’s market
RECOVERY:
: BMW recovered in the market
2001: record level of sales: 2% US market share

5. BMW 5 Short Films About the film Problems $15 million
25% of their media-spending budget, major competitors spent less than 50% on media advertising
To reach 40% increase in sale, increase share of mind
Only available online at BWMFilms.com
Problems
Wrong Segment
Too much budget on short films

6. Luxury or Mass-market
In case study, BMW targeted sales as high as 300,000 cars and planed to reach new sales goals of an additional 40% in the US
Damage the luxury image of BMW
Various series and models or Reduce models to keep simple as Mercedes-Benz
Raise quantity or price

7. BMW Current Customers >50 35 - 50 <35 Most profitable 7 Series

8. VS Current Customer Visitor Profile 25% under age of 25,
Average age: 31
Median income: $88,000
Gender: 88% male
10% under age of 30
Average age: 46
Median income: $143,000
Gender: 63% male

9. Recommandation: Supplement the locations of Ads
Why ?
To better targeting the middle-upper class
To targeting the current consumers
How？
Advertising in The Wall Street Journal, BusinessWeek, and finance.yahoo.com
giving them benefits in their customer service plans to heighten retention rates

10. Maintain BMW films
Why ?
To attract the younger, urban and chic neighborhoods
To increase their share of mind and add to their future 3 Series consumer base
How?
Release films less frequently (every 2 weeks now)
Produce films quarterly or less frequently

11. BMW’s Current Image
Producing more cars than sustainable for a small luxury company
Turning point
Do not enter mass market, maintain luxury image
Rise in customer’s perceived value of BMW cars

12. BMW: Luxury Brand ?
Luxury-something that is expensive and hard to obtain.
Cut down on the number of cars produced
P S1 S D Q

13. McKinsey’s study McKinsey 2001 Profit Change 1 % increase in price
Up to 8.6% increase
1% reduction in variable cost
Up to 5.9% increase
1% increase in quantity sold
Up to 2.8% increase
1% reduction in fixed cost
Up to 1.7% increase

14. Recommendation: Differentiation
Currently not much variety among 3, 5, and 7 Series Sedans 5 3 5 3
Example is on 3/5/7 series sedans..but BMW needs to do a better job targeting all together on all series.
BMW wants consumers to progress from 3 to 5 to 7 series b/c they get more profit esp. on series 7 model 7 7

15. Why Differentiate? Better target customers
Avoid cannibalizing brand and entering mass market
Maintain luxury

16. Differentiation Break consumers into 3 segments
Segment 1: willing to pay low price = 3 Series
Segment 2: willing to pay moderate price = 5 Series
Segment 3: willing to pay high price = 7 Series
Use self-selection price discrimination

17. 3 Series 5 Series 7 Series Age Under 35 35-50 50 + Features Minimal
Moderate
Enhanced
Design
Youthful/Futuristic
Practical
Classic/Luxurious
Price
$30,000
$60,000
$90,000

19. Thank You!